Ricardo and Comparative Costs
David Ricardo (1772–1823) was the representative theorist of the classical school of economics which was initiated by Adam Smith. Ricardo’s theory of comparative advantage developed in Chapter 7 of his Principles (1817) has been one of the few theories that economists of all the different schools understand and agree with. Although the current mainstream economics, the neo-classical school, has been developed from the marginal revolution1 against the classical school, it cannot be denied that Ricardo’s theory of comparative advantage is still an important corner stone of the modern theory of international trade and has been studied intensively by many leading scholars of the neo-classical economics.2 Such modern interpretations of Ricardo are, however, sometimes very much different from what Ricard really meant, as will be seen below.
KeywordsComparative Advantage Labor Population Land Rent Wage Cost Gold Production
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